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Hong Kong's banking association has proposed increasing market transparency and reducing the number of maturities in the city's interbank reference rates market following a price-rigging scandal in London.

The British scandal saw banks manipulate interbank rates to profit from trades.

The Hong Kong Association of Banks yesterday said it would hire an independent consulting firm to survey and collect feedback from the banking industry in the coming weeks.

This follows a report from the Treasury Markets Association that shortlisted five measures to improve the fixing of the Hong Kong interbank offered rate.

The research recommends clear guidance for banks on rate submission and the development of a code of conduct to direct such submission and fixing processes.

It also suggests eliminating some contracts with maturities falling on odd periods.

"The consultation with industry aims to collect a comprehensive view from industry participants, as well as views from legal and accounting experts, prompting a fundamental acknowledgement to the involved parties," Anita Fung, the chairman of the association, said yesterday.

The overall money borrowing and lending mechanism between banks in Hong Kong remained sound, while the association took a proactive approach to ensure the system continued to work effectively, said Fung, who is also the chief of HSBC's Hong Kong operation.

Edmond Lau, an executive director of the Hong Kong Monetary Authority, the city's de facto central bank, said it expected the refinements could be effective from the first quarter of next year, and the banks might require two to three months to amend their systems to cope with the new standards.

The Hong Kong interbank offered rate is the city's equivalent to Libor that functions as the benchmark interbank lending rate. The rate involve borrowing contracts ranging from overnight to a 12-month period.

Jack Cheung, the chief executive of the Treasury Markets Association, said the elimination of illiquid contracts with "uncommon maturities" would be phased out, leaving the more popular ones such as overnight, 1-week and 1-year contracts.